This year, the average U.S. retiree has a monthly income of $1,404, which is about $44 more compared to 2017. Four years ago, the average monthly retirement income was only $1,294 per person. Considering these facts, it’s no wonder why most pensioners have a hard time to make ends meet.
Like everyone else, retirees have bills to pay. In 2014, electricity alone was over $114 per month. On top of that, pensioners rely heavily on medications to fight heart disease, diabetes, arthritis, and other age-related conditions.
Sure, you can always ask your children for help, but what if you don’t have a family? Or perhaps they already have a lot of debt and need money to secure their own future? Plus, you may feel embarrassed to ask for a bit of cash.
Luckily, more and more lenders are offering payday loans for retirees. This type of financing is easier to obtain than traditional loans and has more flexible terms. Let’s see how retiree loans work and whether or not they’re right for you!
How Do Payday Loans Work?
Each year, about two and a half million households in the U.S. request payday loans. That’s approximately one in 50 people. This market is booming, offering a wide range of loans even for those with bad credit.
A payday loan or cash advance is a short-term loan that requires no collateral. It can be used for any purpose, from car and home repairs to school tuition. In general, customers can borrow up to $1,500 before their next paycheck arrives.
These types of loans are offered by private financial institutions, both online and offline. For example, you can request a loan at a local office or apply for one over the Internet. The process is quick and simple.
Most times, with same day payday loans borrowers receive money on the same day they apply – or the next business day. This is a lot faster compared to traditional loans, which take weeks or months to be approved.
Lenders usually require an ID card or driver’s license along with proof of income. You must also have an active checking account; this is where your money will be deposited. Borrowers must be at least 18 years old and reside in the state where the lender is located.
However, it is possible to get a payday loan with no proof of income. In this case, you may need to use your car or other personal assets as collateral. Also, you may be retired or on disability, and still receive the money you need.
To qualify for a loan, you must not be a debtor in a bankruptcy case. If you apply online, you may also need to submit your Social Security Number. In case you apply at a local office, it’s enough to bring a valid government issued photo ID and proof of income.
How to Apply for a Payday Loan
The application process is quite straightforward. First, decide whether you want to apply for a loan online or in person. There are several options available:
- Visit a local branch and request a loan
- Send your documents by fax or email to the lender
- Fill out an online form on the lender’s website
Another option is to use a third-party, such as Bonsai. Our agency does not offer loans, but we can help you find one that meets your needs. Our team connects borrowers with lenders and provides information about various financing options.
Customers can also call the lender directly and then send their documents by fax. Once your request is approved, you will receive the money o your checking account within 24 business hours. Approval can take less or more time depending on the lender.
If you apply at a local branch, you may able to get your loan in cash immediately. Some lenders can also load the funds on prepaid cards.
Most lenders require borrowers to pay back the loan within two to four weeks. If you’re not able to pay before the due date, you may request an extension. Repayment terms vary from one lender to the next.
Generally, customers can pay back the loan with a debit card, cash, or post-dated checks. They can also opt to have the money debited from your bank account automatically. Either way, you will owe the money you borrowed plus interest.
Most lenders don’t charge any prepayment penalties. However, in some states, paying back your loan before the due date may result in lower interest rates.
Some financial institutions allow customers to cancel the loan within 72 hours. If you change your mind and decide not to use the loan, contact the lender immediately. In this case, you won’t pay any penalty fees.
How Much Money Can You Borrow?
How money you can get varies among states. The maximum loan amount in Alabama and Florida, for instance, is $500. If you live in California, you cannot borrow more than $300.
Delaware residents can request as much as $1,000, which must be paid back within 60 days. Illinois allows customers to borrow up to $1,000 or 25 percent of their gross monthly income. The due date cannot exceed 120 days.
Oregon has the most flexible laws regarding payday loans. Borrowers can obtain up to $50,000 with a 60-day repayment term.
Beware that cash loans are not available in all states. Wyoming, Wisconsin, Maine, and Utah either prohibit these loans or have very strict conditions.
According to the Consumer Financial Protection Bureau, the cost of a payday loan is the loan amount plus $15 or more for every $100 borrowed.
That’s quite a lot, but since you can only borrow a small amount, the costs are reasonable. Just make sure you pay back the loan on time; otherwise, you’ll get in debt.
Also, beware that most states set a limit on the interest fees that lenders can charge. This may range from $10 to $30 for every $100.
Are Retirees Eligible for Cash Loans?
In 2016, U.S. retirees took out more cash loans than any other age group. More than half of customers had an average annual income of $30,000 or less. This explains why the number of loans offered to seniors tripled that year compared to 2015.
More and more lenders are now borrowing money to retired workers. Seniors are charged the same interest rates – which are quite high – as everyone else. However, sometimes you simply cash – and you need it quickly.
Retirees who are interested in getting a loan must follow the steps listed above. They can apply online or in person, bring their ID, and submit proof of income. A copy of the Social Security award letter will be necessary as well.
Just because you’re not working anymore, it doesn’t mean you can’t take out a loan. Your pension represents a source of income, so most lenders are likely to approve your request.
No matter how well you manage your money, there will always be unexpected expenses.
You or your spouse might get sick, your house may need emergency repairs, or you can no longer afford the medications you need. Under these circumstances, a cash loan can be a lifesaver.
The Advantages of Payday Loans for Retirees
Without a doubt, payday loans have their perks. Despite the high interest rates, they can make your life easier and help you get through tough times. Plus, this type of financing saves you from penalties when you’re unable to pay your bills on time.
The primary advantage of retiree loans is the fast application process. Most lenders will approve your request almost instantly. It’s no need to fill out a ton of paperwork or wait for months to receive the funds as it happens with traditional loans.
If you bring the documents required, your application can be approved in as little as 15 minutes. The tight competition between lenders pushes them to offer quick services.
The convenience factor matters too. It’s one thing to request a loan online, and another thing to wait in line at the local bank. Plus, after hours of standing in line, you have no guarantee that your request will be approved.
When applying for a cash loan, you receive feedback within 60 minutes or so. You may contact a different lender right away. Additionally, it’s not necessary to book lengthy appointments with a loan officer and waste precious time.
Furthermore, lenders only conduct a soft credit check. They look at your overall financial health rather than your credit score and history. Traditional banks, on the other hand, will check the smallest details on your credit report.
If your credit score is less than perfect, don’t fret. Nowadays, there are plenty of loans for pensioners with bad credit. Research your options, discuss with different lenders, and make a decision accordingly.
Are There Any Drawbacks?
Payday loans have a bad reputation because of their high interest rates. Some carry an annual percentage rate of up to 500 percent. Since they must be repaid in a short time, it’s easy to get in debt.
Beware that if you roll the debt over, you may have to pay extra fees, such as:
- Rollover fees
- Late payment fees
- Non-sufficient funds charges
For example, if the lender tries to automatically withdraw money from your account and you don’t have enough funds, they may charge additional fees. Read the fine print before requesting this kind of loan – in case something doesn’t seem right, move on to a different lender.
There is a high risk of getting caught in a debt trap when the loan is not paid in full and on time. The fees will add up, so you might not be able to keep up with the payments. Additionally, you will incur additional interest charges.
Another thing to consider is that not all lenders are created equal. There are plenty of fraudulent companies that offer this type of financing. To stay safe, choose an established lender that has been in business for years.
Bonsai can help you find trustworthy lenders with a track record of success. We only work with reputable agencies that offer competitive rates. Whether you have a low income or bad credit, our team can guide you in the right direction.
Research Your Options
Don’t go to the first lender who is willing to provide the money you need. Compare at least three or four different companies on a like-for-like basis. Consider their interest rates, penalty fees, repayment terms, and customer service.
Go online and research the lenders to find the best payday loans you’re interested in. Read customer reviews and testimonials. Check the Better Business Bureau (BBB), Yelp, and other business directories to find out more about the companies you’re interested in.
Do Payday Loans Affect Your Credit Score?
When you request a payday loan, it won’t show up on the credit record of the Equifax, Experian, and Trans Union.
The downside is that if you fail to pay back the loan, debt collectors may report you to the major credit bureaus. Additionally, certain credit reporting agencies may collect your payday loan history.
If you ever decide to request a traditional loan and you have bad credit, your application might be declined. That’s why it’s so important to be careful about cash loans.
Late repayment can negatively affect your credit score and lower your chances of getting approved for traditional loans.
Are Payday Loans Worth It?
Now that you know the pros and cons of payday loans for retirees, it’s up to you whether or not to request one.
This type of financing is easier to obtain and more convenient than traditional loans. Plus, it’s accessible even to those with bad credit. You can request a payday loan online from the comfort of your comfort.
Make sure you can repay it on time. This will not only help you avoid penalty fees but also reflect positively on your credit rating. Weigh the advantage and drawbacks so you can make an informed decision.
Visit our Learning Center for more information about personal loans, cash loans, and credit cards. We provide everything you need to make the right choice!